The Global Anti-Bribery Landscape

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The global anti-bribery landscape The global anti-bribery and corruption sphere continues to evolve – whether through stronger legislation, new major investigations or enforcement.

We examine here the latest developments in the current anti-bribery landscape across all regions to help you stay up to date on the trends and areas of risk in this area. Through our Bribery Watch tool, which is available to Freshfields clients, we track these developments in over 150 countries. Before the individual country summaries, we set out below five trends that cut across jurisdictions.

1 2 3 4 5

Growing use of alternative ‘Rest of the world’ Prosecutors and DOJ announces new Energy and natural means of resolution overtakes the US law-makers continue policy on co-ordination resources key target in foreign bribery to emphasise potential of corporate enforcement of enforcement but a investigations – although benefits of self-reporting to avoid ‘piling on’ range of sectors are in US activity remains high and co-operation – but prosecutors’ cross-hairs risks remain

2 The global anti-bribery landscape

Growing use of alternative means Latin America is a growing hotspot for domestic bribery complex cases of foreign bribery, it nonetheless demonstrates of resolution enforcement as the ripple effect of Brazil’s Operation Car how much an offer of a DPA is within the discretion of Wash investigation continues to be felt around the region. prosecutors and the risks arising from a jury trial. As reported in our global guide on corporate crime, there is Several countries in the region have taken steps against The US Department of Justice (DOJ) has gone further than a growing use of alternative means of resolution in corporate Brazilian construction group Odebrecht – including a recent most by introducing a presumption that it will decline to criminal investigations (including deferred prosecution fine of US$61m levied on group companies by Mexico’s prosecute where a company voluntarily self-discloses agreements (DPAs), guilty pleas and other resolutions). Ministry of Public Administration. It remains to be seen misconduct, fully co-operates with the DOJ and takes timely This is likely to have an impact on bribery investigations and whether this new focus on corruption – in places like and appropriate remedial action (including paying enforcement. As demonstrated by the UK example, Argentina, Colombia, Mexico and Peru – will lead to more disgorgement). But the DOJ retains significant discretion, the introduction of such mechanisms tends to be a precursor enforcement action against more international groups of and if, in its view, aggravating factors are present, then this to increased enforcement action. This year, Canada and companies, as it did in Brazil. presumption can be rebutted. (See here for a detailed Australia are likely to follow Singapore and France in analysis of the FCPA Corporate Enforcement Policy.) introducing DPAs, and Japan will introduce new leniency/ Prosecutors and law-makers continue plea bargaining arrangements in June. to emphasise potential benefits of Further, despite increased prosecutorial co-ordination, there is no guarantee a resolution in one jurisdiction will lead to a Where countries have similar means of resolving criminal self-reporting and co-operation – similar outcome elsewhere. Last year, for example, the DOJ cases, they are also more likely to work together but risks remain declined to prosecute a US engineering company for paying to co-ordinate in imposing fines, which we have seen, for As noted, several jurisdictions have recently introduced, bribes in India because the company had met the various example, with Brazil and the US, among others. or are considering introducing, new DPA/leniency/plea deal requirements, including voluntarily self-reporting the regimes. Each of these emphasise the potential benefits misconduct to the DOJ. Upon news of the declination being ‘Rest of the world’ overtakes the US in of self-reporting, co-operation and remediation – but made public, Indian authorities opened up an investigation foreign bribery investigations – although prosecutors often still have wide discretion. into the company’s Indian unit; the investigation is pending. US activity remains high For example, 2018 has seen the first company convicted at The DOJ, for its part, has announced a new policy that seeks This trend has been building for some years, but it has really trial for failing to prevent bribery in England. The company to minimise ‘piling on’ multiple penalties for the same come into focus in the past 18 months as many non-US in question was unable to convince the jury it had adequate corporate misconduct by encouraging co-operation among authorities have shifted gears to ramp up their activity. procedures to prevent bribery. Even though the company department components and other enforcement agencies TRACE International reported that Europe had more foreign made a self-report, co-operated with the investigation and – including its counterparts overseas – in Foreign Corrupt bribery investigations ongoing than the US as at 31 took remedial action, the Crown Prosecution Service Practices Act (FCPA) and other types of corporate criminal December 2017 – but, with 114 investigations, the US was by nonetheless opted to prosecute rather than offer the cases. See more on the new policy below. far still the most active single jurisdiction. company a DPA. While this is no indication of how the UK Serious Fraud Office (the SFO) would approach larger, more

Continued

3 The global anti-bribery landscape

DOJ announces new policy on • third, the policy encourages the DOJ, where possible, overlapping investigations and penalties that can result in co-ordination of corporate enforcement to co-ordinate with – and credit the amount of fines unfair outcomes for corporate defendants in cases such as already paid to – other federal, state, local and foreign large FCPA investigations when multiple regulators are in to avoid ‘piling on’ enforcement authorities seeking to resolve a case for the the mix. US Deputy Attorney General (DAG) Rod Rosenstein same misconduct; and announced a new DOJ policy on 9 May 2018 that seeks to • fourth, the policy sets forth factors that the DOJ may use in Energy and natural resources key target minimise ‘piling on’ of duplicative penalties for the same evaluating whether co-ordination and apportionment of enforcement but a range of sectors are corporate misconduct by encouraging co-operation among between enforcement authorities serve the interests of in prosecutors’ cross-hairs department components and other enforcement agencies justice in a particular case. The factors include the within and outside of the US. The policy instructs DOJ egregiousness of the wrongdoing, statutory mandates Prosecutors in a number of jurisdictions have a deepening components to co-ordinate with one another and with other regarding penalties, the risk of delay in finalising a familiarity with, and understanding of, the energy sector so domestic and foreign regulators when imposing penalties on resolution and the adequacy and timeliness of a company’s it is no surprise it remains a key area of focus. Five of the a company. This could be a welcome relief for global disclosures and co-operation with the DOJ. 11 corporate FCPA resolutions in 2017 were in this sector and companies, which have previously faced sometimes about half of the UK SFO’s publicly listed bribery investigations overlapping and duplicative penalties for the same Among other things, the policy reflects an increasing are in the sector. This is, in large part, due to investigations underlying conduct. effort by the DOJ to co-ordinate more closely with foreign spiralling out of the Unaoil and Operation Car Wash matters. authorities. DAG Rosenstein noted that the DOJ will be The policy consists of four key features: dedicating additional resources to the DOJ’s Office of That said, recent FCPA and UK Bribery Act (UKBA) • first, the policy includes a reminder that the DOJ should International Affairs to assist with obtaining evidence from resolutions and investigations are spread across a range of not use its criminal enforcement authority against a abroad. This is also intended to improve the DOJ’s ability to sectors, including healthcare, telecoms, construction, company for ‘purposes unrelated to the investigation support its foreign counterparts in similar requests. aerospace and defence, and fast-moving consumer goods. and prosecution of a possible crime’ (for example, to aid TRACE International also reports that US foreign bribery Although the new policy is potentially good news for in resolving a civil matter); investigations in the financial services industry just overtook companies under investigation for bribery and corruption or investigations in the extractive industries (22 to 21) as at • second, the policy directs the different components other charges that span across different countries and year-end 2017. A significant number of these relate to within the DOJ to co-ordinate with each other to ‘avoid involve multiple prosecutors and regulators, DAG Rosenstein investigations into hiring practices. the unnecessary imposition of duplicative fines’ and cautioned that the DOJ’s practical ability to co-ordinate with ‘achieve an overall equitable result’ based on a other agencies may be limited due to ‘the timing of other corporation’s conduct. DAG Rosenstein noted that such agency actions, limits on information sharing across borders, co-ordination ‘may include crediting and apportionment’ and diplomatic relations between countries’. Nonetheless, an of financial penalties, fines, and forfeitures; internal DOJ policy is the first step in addressing the

4 Landscape by country

AMERICAS ASIA AND ASIA PACIFIC EUROPE MIDDLE EAST AND AFRICA Americas

6 AMERICAS

Argentina

New law focuses on corporate criminal In late 2017, Argentina’s congress passed a law providing for The law refers to corporate ‘integrity programmes’ liability for corruption offences, alternative corporate criminal liability for certain corruption-related consisting of a set of actions, mechanisms and internal crimes, including national and transnational bribery. The procedures to promote integrity, supervision and control, resolutions and corporate compliance law also provides for vicarious liability and penalties that aimed at preventing, detecting and correcting irregularities Emerging trends in Latin American anti-bribery and include fines (up to five times the undue benefit obtained or and unlawful acts covered by the law. The content of such corruption efforts include corporate criminal liability for that could have been obtained) and suspension of (business) integrity programmes provides clues as to what authorities corruption offences, alternative resolutions and corporate activities or prohibition, for a period, from participating in will consider ‘adequate’ under exemption requirement (ii). compliance, and Argentina is at the helm of all three. public tenders/bids for public works or services. The law, which went into effect on 1 March 2018, does, however, permit exemption from liability for a company that (i) voluntarily self-discloses (spontaneously denounces) the commission of a covered offence, as a result of its own internal detection and investigation; (ii) can show that it had an adequate control and supervision system in place before the relevant misconduct; and (iii) returns the undue benefit obtained. The law also allows for matters to be resolved through leniency (collaboration) agreements, for companies that co-operate with Argentine authorities.

7 AMERICAS

Brazil

Brazil continues fight against corruption Leniency agreements Amongst other things, the guidelines set out aggravating and with several large-scale investigations mitigating factors and indicate the percentage by which any Leniency agreements in Brazil have developed a high penalty may increase/decrease where such factors are present. Brazil, long a crusader in the fight against – as well as an profile, largely due to their use in resolving aspects of For example, the existence of a suitable company integrity eyewitness to – corruption, has had another busy year, Operation Car Wash. programme may reduce the penalty by up to 4 per cent. with the continuation of investigations such In August 2017, Brazil’s Ministério Público Federal (Public Each of these developments could impact companies subject as Operation Car Wash (the investigation into Brazil’s Prosecutor’s Office) issued leniency agreement guidelines to enforcement actions in Brazil, providing new clues into Petróleo Brasileiro, known as Petrobras) and Operation for Brazilian federal prosecutors, formalising practices the processes for negotiating leniency agreements with Zelotes (the investigation into bribery of Brazilian tax for the entering into of such agreements. Brazilian authorities. authority administrative judges to obtain favourable tax decisions), as well as several new corruption-related That same month saw a ruling stating that the Public ‘Operations’. A few key developments and themes have Prosecutor’s Office may rule upon administrative proceedings Continued international co-ordination only if the Ministry of Transparency and Comptroller General emerged in Brazil, based upon recent activity. Beyond its own robust domestic anti-corruption efforts, of the Union (CGU) ratifies its decision. Although it is not Brazil has been co-ordinating with authorities abroad in final, and was only applied in the specific case of Odebrecht, some of the world’s largest anti-corruption investigations. this situation could be applied to other agreements that were Such multijurisdictional muscle is likely here to stay – entered into only with the Public Prosecutor’s Office. and to spill over into domestic anti-corruption efforts and And, in July 2017, a construction company and the resolution strategies. CGU entered into the first leniency agreement under the provisions of the Brazilian Clean Company Act. The company, Legislated compliance as part of the agreement, agreed to pay BRL 574m (US$175m) (including a fine, damages and disgorgement of illicit As of late 2017, companies entering into certain contracts enrichment).1 with the public administration of the state of Rio de Janeiro must have integrity (compliance) programmes in place. In May 2018, the CGU and the Office of the Attorney General Foreign companies with headquarters, subsidiaries or (AGU) published guidelines for calculating penalties to be ‘representation’ in Brazil are subject to this law. paid under Clean Company Act leniency agreements.

1. Agreement between UTC Engenharia SA and the CGU dated July 2017.

8 AMERICAS

Canada Chile

Facilitation payments are Parliament considering the Chile’s new president takes • updating Chilean legislation on offences no longer permitted under introduction of DPA-style office with plans to overhaul the relating to the exercise of public functions, such as bribery and Canadian law agreements country’s anti-corruption laws corruption; and and regulations Facilitation payments are now prohibited Deferred prosecution agreements (DPAs) • expanding the requirements of under Canadian law. On 31 October 2017, may soon be available to Canadian In March 2018, Mr Sebastián Piñera transparency that must be met by all amendments to Canada’s Corruption of prosecutors. In December 2017, the Echenique took office as the new president autonomous state bodies, including the Foreign Public Officials Act, S.C. 1998, c. 34 Canadian government completed a of the Republic of Chile. Mr Piñera’s Public Prosecutor’s Office, the General came into force, repealing the facilitation consultation on the potential creation of a government programme for the next Comptroller’s Office, the Central Bank payments exemption in the Act. This DPA regime as an alternative means of four years includes the following proposals: and the Electoral Service, among others. amendment was first passed by the disposing with certain charges. The • greater oversight mechanisms for legislature in 2013, but there was a delay in government’s summary report on its congress to inspect the performance implementation to allow companies to DPA consultation noted the majority of of the government and the public adapt their policies and procedures. respondents were in favour of the administration; introduction of a DPA regime in Canada. • the creation of a new institution named Canadian Court of Appeal The 2018 federal budget formally the General Comptroller of the Congress confirms co-conspirators may announced that the government would to strengthen ethics control and budget be found guilty, even where move forward with legislation introducing management control; there is no evidence a bribe was alternative forms of resolution similar to offered or made to an official US and UK DPAs, through what is referred to in the draft legislation as a Remediation In 2017, the Court of Appeal upheld a Agreement Regime. Under the proposed 2013 decision (R v Karigar), extending the law, such agreements would only be scope of the bribery offence by including available to corporate defendants agreements among co-conspirators to bribe (not individuals) and would be subject a foreign public official, even without to court approval to ensure they are fair, evidence that a bribe was made or offered reasonable and proportionate and in the to an official. An application for leave to public interest. appeal the decision to the Canadian Supreme Court was filed in September 2017.

9 AMERICAS

Colombia Mexico

Investigations into Odebrecht The fallout from this scandal has made New anti-corruption system in However, while progress in implementing scandal continue, and corruption one of the key issues in force, but practical issues have the new Anti-corruption System has been this year’s presidential elections. It has also slow, Mexican authorities have recently Colombian prosecutors start to arisen in its implementation led Colombian authorities to engage with brought enforcement action against use recently introduced foreign their counterparts elsewhere in the region Mexico introduced sweeping reforms to its Brazilian construction group Odebrecht bribery laws – including entering into a new memorandum anti-corruption laws in 2017 with a number following its admission in 2016 that it paid Investigations in Colombia continue into of understanding with Peruvian authorities of laws creating what is referred to as bribes in a number of countries, including the awarding of large infrastructure to combat cross-border bribery. Mexico’s Anti-Corruption System. Among Mexico. In April, Mexico’s Ministry of other things, the reforms included the Public Administration debarred two projects to Brazilian construction group According to local news reports, Colombian creation of new oversight, enforcement and Odebrecht subsidiaries and their legal Odebrecht, well over a year after the prosecutors have started a number of investigation mechanisms at state and representatives from government contracts company admitted – in a resolution with investigations into Colombian companies federal level, the introduction of a new for over two years and levied fines of over US, Swiss and Brazilian authorities – for foreign bribery – the first such leniency programme for those who US$50m, in total, on the subsidiaries and to paying bribes to secure government investigations to be reported since new self-report bribery and, for companies, individuals involved. contracts in Colombia. foreign bribery laws were enacted in the new requirements regarding compliance country in 2016. programmes and new potential corporate liability for bribery. While the reforms were introduced to much fanfare, implementation has proven difficult – particularly with respect to the appointment of new anti-corruption prosecutors and judges as envisaged by the new laws. With Mexicans going to the polls in July 2018 to elect a new president, anti-corruption is high on the political agenda. It remains to be seen, however, if this will translate into a greater emphasis on enforcement and use of Mexico’s new laws in this area.

10 AMERICAS

Peru

New law targets companies for A January 2017 Legislative Decree amended Peru’s Law No Pursuant to Law No 30424, legal entities that commit the corruption offences 30424 on the administrative liability of legal entities for the crime of active transnational bribery shall be exempted commission of active transnational bribery, expanding its from liability if, prior to the commission of the crime, the Peru, already active in the fight against bribery and scope to other offences in addition to transnational bribery legal entity adopted and implemented a prevention system corruption, is poised to play an increasing role in – thereby extending the criminal offences for which a legal (compliance programme) appropriate to its nature, risks, anti-corruption efforts, thanks to legislative developments entity can be found liable. Given this amendment, legal needs and characteristics, consisting of supervision and and enforcement activity from recent months. entities may now be found liable for money laundering, monitoring measures suitable for preventing the crime or terrorism financing and domestic bribery, as well as significantly reducing the risk of its being committed. transnational bribery. The law came into effect on 1 January On the enforcement side, the fallout from the Odebrecht 2018 and has established a new system for attributing scandal continues: for example, following the December 2016 liability, through which legal entities are autonomously FCPA resolution between officials of the company and the (severally) liable and can be directly punished for US DOJ, Peru’s Attorney General’s Office announced the committing a covered criminal offence. appointment of a special group of prosecutors in charge of Further, a legal entity can be held responsible when the the country’s Odebrecht investigations. This special team of offence is committed on its behalf and for its direct or prosecutors has been extremely active, requesting preventive indirect benefit by (i) its partners, directors, administrators detentions and undertaking seizures and raids against or representatives in the exercise of the functions of their persons (public officials and private individuals) suspected office; (ii) natural persons who, being under the authority of being involved in Odebrecht-related acts of corruption. or control of the persons previously mentioned under (i), commit the offence on the orders or authorisation of the latter; and (iii) natural persons mentioned under the preceding item, when supervision and control are not duly exercised on them by managers or representatives.

11 AMERICAS

United States

FCPA still being actively enforced The Supreme Court of the United States decided an • a Dutch oil and gas services company, which, in November important issue with respect to the time period in which the 2017, agreed to resolve DOJ charges and pay a criminal The DOJ and the SEC continue robust enforcement of SEC must commence an action to seek disgorgement. In the penalty of US$238m in connection with bribery schemes the FCPA pursuing investigations against corporations June 2017 Kokesh v SEC decision, the US Supreme Court held relating to officials in Angola, Brazil, Equatorial Guinea, and individuals. that any claim for disgorgement in an SEC enforcement Iraq and Kazakhstan3 (the company settled with the US enforcement trends are in line with the themes we have action must be commenced within five years of the date the Dutch Public Prosecutor’s Office with respect to related observed globally, with the DOJ’s continued co-ordinated, claim accrued. The Kokesh decision is a blow to the SEC’s conduct in 2014, and the DOJ ‘credited [the company’s] cross-border enforcement efforts and continued emphasis long-standing view that disgorgement claims were not payment of penalties to the [Dutch Public Prosecutor’s on seeking to hold individuals accountable for corporate subject to a five-year statute of limitations, and the Office] and the payment of penalties likely to be paid to wrongdoing. In the last year alone, the DOJ has announced co-director of the SEC’s Enforcement Division acknowledged the Brazilian Ministério Público Federal’); several multijurisdictional anti-corruption actions resulting that Kokesh ‘will have particular significance for our FCPA • a Singaporean oil and gas services company and its wholly in billions of dollars of cumulative corporate penalties. matters’. Going forward, this decision may give greater owned US subsidiary, which, in December 2017, agreed The DOJ also implemented its FCPA Corporate Enforcement predictability to SEC enforcement. to pay a combined total penalty of over US$422m Policy, building upon the alternative FCPA resolution scheme to resolve charges with US, Brazilian and Singaporean first set forth in the prior ‘Pilot Program’. Co-ordinated, cross-border authorities in connection with a scheme to bribe Brazilian officials;4 and The SEC has continued to pursue actions for violations of the enforcement efforts accounting provisions of the FCPA. While the majority of Over the past eighteen months, the US authorities actively • a French global financial institution and its wholly such cases are predicated on evidence of bribery, the SEC has sought to enforce the FCPA with a number of major owned subsidiary agreed to pay a combined total of over also shown interest in other cases where it asserts that the multijurisdictional FCPA resolutions, including ones with: US$1bn to US and French authorities in June 2018, of corporation’s failure to maintain accurate books and records • a Swedish telecommunications company, which, in which US$585m relates to FCPA charges. The financial and adequate internal controls created a heightened risk of September 2017, agreed to pay over US$965m as part institution admitted paying an intermediary over bribery, even though the SEC has not alleged in those cases of a global resolution (among US, Dutch and Swedish US$90m, a portion of which the intermediary then paid that the corporation actually made or offered to make authorities) involving an improper payment scheme in to Libyan officials to secure investments from the Libyan corrupt payments to a foreign government official. Uzbekistan;2 state for the financial institution. (The remainder of the penalty relates to charges of misconduct in US$ and Japanese yen LIBOR submissions, which is unrelated to the FCPA case.5)

2. Telia Company AB global resolution dated 21 September 2017. 3. SBM Offshore NV deferred prosecution agreement entered into with the DOJ dated 27 November 2017. 4. Keppel Offshore & Marine Ltd global resolution dated 22 December 2017. 5. Société Générale SA global resolution dated 4 June 2018. Continued

12 AMERICAS

United States

In calculating the fines, US authorities credited the amounts (with charges filed or unsealed for over two dozen This Policy (about which we have written in greater paid, or likely to be paid, to authorities abroad – a practice individuals), and the SEC’s ‘Division of Enforcement detail here), in conjunction with the DOJ’s February 2017 that, as of May 2018, is the crux of a new DOJ Policy on considers individual liability in every case it investigates; guidance in Evaluation of Corporate Compliance Programs Co-ordination of Corporate Resolution Penalties it is a core principle of our enforcement program’. describing general features of an effective compliance (‘Co-ordination Policy’). The Co-ordination Policy, which has programme, provides guidance to companies looking both With a number of individual FCPA actions in the pipeline, been incorporated into the US Attorneys’ Manual (and is to avoid FCPA-related prosecution and to resolve FCPA the months ahead are primed to remain focused on the discussed more thoroughly in our Introduction), is aimed at matters through alternative means. individuals alleged to have participated in foreign enhancing the DOJ’s ‘relationships with [its] law enforcement corrupt practices. In April 2018, the DOJ issued its first official declination partners in the United States and abroad, while avoiding under the Policy (this follows seven other declinations unfair duplicative penalties’, per DAG Rosenstein. The announced under the Pilot Program) to a data analytics Co-ordination Policy is likely to have significant implications Alternative resolutions company, noting the company’s ‘prompt voluntary for FCPA actions where there is a particular risk of parallel On 29 November 2017, the DOJ issued its FCPA Corporate self-disclosure’; identification of the relevant misconduct investigations by multiple anti-corruption authorities that Enforcement Policy (the ‘Policy’). The Policy, codified in the and ‘thorough investigation’; ‘full cooperation’; enhancement can lead to large, co-occurring corporate penalties. US Attorneys’ Manual, revises and perpetuates the FCPA of its compliance programme and internal accounting With an ever-growing list of public statements praising ‘Pilot Program’ adopted in 2016, reflecting the DOJ’s ongoing controls; ‘full remediation’; and payment of disgorgement to co-operation with, and assistance from, agencies and law effort to provide greater clarity and predictability regarding the SEC.6 (By comparison, later that month, an aviation enforcement worldwide, cross-border co-ordination the benefits that companies can expect to receive if they solutions company agreed to pay a US$137.4m penalty, and to and co-operation will continue to increase for the self-report evidence of misconduct, co-operate fully with retain an independent corporate compliance monitor, as part foreseeable future. DOJ investigations and undertake appropriate remediation. of a deferred prosecution agreement with the DOJ where the Although the new Policy is largely consistent with the company did not voluntarily self-disclose the relevant 7 Individual accountability original Pilot Program, and also builds upon a longer conduct in a timely manner, although the company did Individual accountability has remained a cornerstone record of DOJ enforcement, it contains several important receive credit for its co-operation and remediation.) of recent FCPA enforcement, from continued application statements. Most notably, the Policy establishes a DOJ officials have indicated that the DOJ will look to the of the DOJ’s 2015 Memorandum on Individual Accountability presumption that the DOJ will decline to prosecute Policy as non-binding guidance in other criminal cases that for Corporate Wrongdoing (also known as the ‘Yates companies that voluntarily self-report potential FCPA do not involve alleged violations of the FCPA. For example, Memorandum’) to the SEC Enforcement Division’s violations, provide full co-operation and engage in timely on 1 March 2018, the DOJ closed its investigation of a bank expectation that it ‘will continue to have intense focus on and appropriate remediation. In order to qualify for a in a fraud matter with a declination letter in light of the the question of individual responsibility in every FCPA declination under the Policy, companies will also be required bank’s voluntary self-reporting, co-operation, remediation investigation’. Speaking more generally, one DOJ official to give up any misconduct-derived benefit, via disgorgement, and payment of restitution, demonstrating the DOJ’s predicted a ‘record year’ for individual prosecutions forfeiture or restitution. apparent willingness to apply the approach set out in the Policy to other criminal laws and forms of misconduct. 6. Declination letter issued to The Dun & Bradstreet Corporation by the DOJ dated 23 April 2018. 7. Panasonic Avionics Corporation deferred prosecution agreement entered into with the DOJ dated 27 April 2018.

13 Asia and Asia Pacific

14 Australia

New corporate offence of failure to prevent The law, if passed, would also make a number of changes Australian prosecutors set out guidelines foreign bribery, higher penalties and to Australia’s existing foreign bribery laws, which could for dealing with companies that self-report potentially lower the bar for prosecution by: introduction of DPAs being considered foreign bribery following uptick in enforcement • removing the requirement that the foreign public official be influenced in the exercise of their official duties On a related note, in December 2017, the Australian Federal Australia has recently shown an increased focus on (only that the intention was to improperly influence Police and Commonwealth Department of Public anti-bribery and corruption enforcement, which we expect the official); and Prosecutions released best practice guidelines setting out to be further strengthened this year with new foreign the principles they will apply when a company self-reports • extending the offence to cover any advantages, bribery offences. suspected bribery or related offences. The guidelines rather than limiting it to business advantages. recognise that prosecuting a company that self-reports A bill is currently making its way through parliament that The bill also seeks to introduce the concept of deferred foreign bribery and co-operates with the investigation may would introduce a new corporate offence, in some respects prosecution agreements (DPAs) into Australian law. Under not be in the public interest, even if there is a reasonable similar to section 7 of the UKBA, of failing to prevent the proposals, the Director of Public Prosecutions may agree prospect of conviction. associates bribing foreign officials – unless the company a DPA with a company (but not individuals) in relation to can show it had adequate prevention procedures (Crimes certain economic crimes – with the final agreement subject Legislation Amendment (Combatting Corporate Crime) to the approval of an ‘approving officer’ (usually a retired Bill 2017). The proposed penalties for such an offence are judge or another suitable candidate whom the Minister significant, with the maximum proposed penalty the of Justice will appoint for a defined period). greater of 100,000 penalty units (approx AUS$21m), three times the benefit obtained from the bribe, or 10 per cent As in other jurisdictions, the proposed DPA regime offers of the company’s annual turnover if the benefit cannot companies the prospect of reaching a negotiated resolution be calculated. with prosecutors to avoid a prosecution and trial. Australian authorities will no doubt, in due course, seek to use the prospect of a DPA to encourage more companies to self-report and co-operate in bribery investigations.

15 China

New anti-corruption authority may The NSC will have formidable powers. During investigations, Commercial bribery in focus: laws have the commission will have the power to question witnesses, lead to more enforcement as crackdown become tougher and enforcement has interrogate and detain suspects, freeze assets and search on graft continues premises. Most notably, the NSC can detain a suspect for increased China has created a new supra-agency, the National up to six months. Such detention is allowed for both On 1 January 2018, China’s commercial bribery regime Supervision Commission (NSC), to institutionalise its bribe-takers (likely officials) and bribe-givers (possibly became tougher through amendments made to the anti-corruption measures. someone in the private sector). The new law establishes Anti-Unfair Competition Law (AUCL). a few safeguards against the abuse of the NSC’s powers: In March 2018, China inserted a new chapter in its The amendments now expressly prohibit bribery of third for example, detention can only be used in specified Constitution and passed a National Supervision Law to parties who can influence a transaction (for example, circumstances (eg if the suspect is a flight risk), and all introduce the new agency. The NSC will consolidate doctors who may be able to influence the use of certain interrogations must be recorded. But some commentators anti-corruption powers that were previously divided among products by their patients or hospitals). are still concerned about possible abuse of the NSC’s power, three agencies: (i) the Communist Party’s Central especially given the detainees’ limited access to lawyers. The law now expressly provides that a company may be Commission for Discipline Inspection, which had wide found liable for bribery carried out by its employees unless latitude to investigate Party members according to Party The creation of this new agency is not a surprise. China the company can establish that the employee was not rules; (ii) the Supervision Ministry under the State Council, started the pilot reform of the supervisory system in a acting to gain business opportunities or other competitive which supervised civil servants; and (iii) the procuratorates, few provinces in December 2016, and then expanded it advantages for the company. which investigated and prosecuted bribery and corruption nationwide in November 2017. Now that NSC and its local cases. The NSC is to function independently of other counterparts are set up, China will amend relevant laws, Administrative fines for commercial bribery have also state agencies. including the Criminal Procedure Law, to reflect this major increased, with the maximum now RMB 3m (approx reform to the anti-corruption regime. US$470,000). This is in addition to the confiscation of any Broadly speaking, the NSC will monitor misconduct by illegal profit obtained. Where the offences are serious, everyone who performs ‘official duties’. That would include the authority can revoke a company’s business licence. not only staff of legislatures, governments, courts and procuratorates, but also managers of state-owned Following these amendments, the authorities will now enterprises, public hospitals and public educational have to publicly disclose any penalties levied, which not and cultural institutions. Note that not all employees of only increases reputational risk for the company involved, state-owned enterprises, teachers at public schools or doctors but may also affect the company’s ability to bid for at public hospitals are considered ‘government officials’ government-funded projects. in China. Only a small number of people working at these entities (likely managers) would be considered to be performing official duties under Chinese law and thus fall under the NSC’s jurisdiction.

Continued

16 China

The amendments have also strengthened the investigatory These changes to commercial bribery laws in the AUCL powers of the authorities. For example, when investigating follow an uptick in enforcement in this area by Chinese commercial bribery, the authorities can now seek to freeze authorities in recent years. Since 2016, several international assets and obtain banking information. But the new powers manufacturing companies have paid administrative fines are subject to procedural safeguards (eg approval must be and disgorgement for violating the AUCL by paying sought from designated senior officials by way of a ‘improper benefits’ that damage fair competition or written report). competitors’ business opportunities. The AUCL allows victims of commercial bribery (likely to be With these changes to the AUCL, it is likely such competitors of the offenders) to commence civil actions and enforcement will continue apace. claim for damages. The amendments clarify how any compensation should be calculated. Usually, this will be by reference to the victim’s actual losses. But if the actual losses cannot be calculated, the compensation amount will be based on the benefits obtained by the offender. And, if such benefits cannot be calculated, the compensation will be at the discretion of the authorities but, in such cases, it will not be higher than RMB 3m (approx US$470,000).

17 Hong Kong India

ICAC active in investigating In a speech in February 2018, the Follow-on investigations According to media reports, an corruption following Commissioner noted the agency continues increasingly common in India investigation into the company in India with a ‘three-pronged’ strategy of followed this announcement – the results high-profile prosecutions of enforcement, prevention and education. The Indian authorities have opened several of which are still pending. While the officials and business people In terms of inter-agency collaboration, the investigations following enforcement action outcome of this case remains to be seen, in recent years Commissioner also confirmed that in a in the US or Europe that relate to alleged this does highlight the risks of follow-on In recent years, the Independent recent investigation concerning a listed misconduct in India. The Central Vigilance investigations for companies that choose Commission Against Corruption (the ICAC) company, the ICAC conducted a joint Commission and the Central Bureau of to self-report in their home jurisdiction. has brought a handful of high-profile operation with the Securities and Futures Investigation have, for example, actively Prosecutorial co-operation across borders is cases against senior government officials Commission. The ICAC is also active in sought information from their counterparts increasing. But, as this case demonstrates, and well-known members of the co-ordinating with authorities in abroad on investigations relating to such co-operation does not always result in business community. Mainland China, among others. large companies in the engineering, a single, co-ordinated resolution that allows construction, aerospace and consumer a company to draw a line under the issue According to the ICAC Commissioner, in goods sectors. in all jurisdictions. 2017, the ICAC received 2,835 corruption complaints (excluding election-related Of particular note is the case of a US complaints), with approximately two-thirds engineering and construction company of the complaints concerning the private that, in June 2017, agreed a ‘declination sector and approximately one-third relating with disgorgement’ with the US DOJ under to various government departments and the then FCPA Pilot Program. The US DOJ 8 public bodies. Further, in 2017, 189 found the company’s Indian subsidiary individuals in 93 cases were prosecuted for had paid ‘bribes’ to Indian officials, but non-election corruption offences, resulting the US DOJ closed its investigation without in a conviction rate of around 80 per cent prosecuting because the company had – although only a small number of these self-disclosed the matter, co-operated with were high-profile cases. the investigation, took remedial measures and agreed to pay over US$4m in disgorgement.

8. Declination letter issued to Linde North America Inc and Linde Gas North America LLC by the US DOJ dated 16 June 2017.

18 Indonesia Japan

First company named as This follows a regulation issued by the A new plea bargaining system This new plea bargaining system does not a suspect by Indonesian Indonesian Supreme Court in 2016 for Japan may impact bribery allow companies or individuals to negotiate (Regulation 13/20160) that clarified how lesser penalties through self-reporting authorities in a corruption case investigations companies could be found liable for certain only their own misconduct – the In July 2017, Indonesia’s Corruption crimes, including corruption, and sought A plea bargaining system will be introduced information given to the authorities Eradication Commission named a company to address certain procedural hurdles that in June 2018 in relation to crimes such as must relate to another participant. as a suspect in a corruption case for had previously existed in bringing cases certain antitrust violations, fraud, bribery the first time. The company is a publicly against companies. and tax evasion. listed construction firm with links Under the new system, a prosecutor can to a government official. agree with a suspect or a defendant Corporate criminal liability has long (collectively referred to here as the suspect) existed in Indonesia, but corporate entities that the prosecutor will not charge the have not, until this case, been targeted in suspect, will revoke a charge against the corruption investigations. suspect or will undertake another action and, in return, the suspect will provide testimony and/or evidence of certain types of crime committed by another individual or company. This provides an incentive to companies, as well as individuals, to provide information about tax, bribery or antitrust violations of others in return for lesser penalties.

19 Singapore

With the introduction of DPAs, Singapore Crimes that will qualify for DPA consideration include This case represents the first such joint corporate may see more anti-corruption enforcement Singapore’s primary corruption, money laundering and resolution by Singaporean authorities and may signal receipt of stolen property offences, but not the primary a new direction for anti-corruption enforcement in against companies fraud offence of cheating. Singapore – particularly given the subsequent On 19 March 2018, the Singapore parliament passed the introduction of DPAs to resolve such matters. It is worth noting that, at this time, Singapore has not Criminal Justice Reform Act, which, among other things, proposed any amendments to the standard for corporate enacts a framework for deferred prosecution agreements criminal liability, which has closely followed the English (DPAs) into the current Criminal Procedure Code. The new common law ‘identification principle’. Under this doctrine, law largely copies provisions from the UK DPA regime, with at least one individual who is sufficiently senior to be a few key differences: (i) Singapore DPAs will apply to far considered the company’s ‘directing mind and will’ must fewer criminal offences; and (ii) the law does not require have had the relevant criminal intent for the criminal acts Singapore prosecutors to issue guidelines on when a DPA is to be attributed to the company. That could present a huge appropriate. In keeping with historical practice, Singapore is hurdle for prosecutors wanting to use the new DPA regime unlikely to issue such guidelines on the exercise of where a company seeks to challenge corporate attribution. prosecutorial discretion. Companies should not readily agree to a DPA in Singapore Nearly identical to the UK legislation, the Singapore law without giving serious consideration to whether prosecutors includes provisions on (i) persons who may enter into a DPA could actually make their case without consent. On the (corporates, but not individuals); (ii) court approval if the other hand, this may signal that further amendments to the DPA is ‘in the interests of justice’ and the terms are ‘fair, Penal Code are coming later this year, which may include reasonable and proportionate’; (iii) breach; (iv) variation of new corporate criminal attribution rules. terms; (v) expiry; (vi) publication of information (the DPA, The introduction of DPAs follows the December 2017 a statement of facts and the court approval will all be made announcement that the Singapore Attorney General, public); (vii) use in criminal proceedings; and (viii) the use as part of a resolution led by the US DOJ, had served a of money received. Singapore oil and gas services company with a conditional warning in lieu of prosecution for corruption offences. The company was ordered to pay over US$105m to Singapore. This was part of a combined penalty of US$422m agreed with authorities in the US, Brazil and Singapore to resolve charges the company had paid bribes to officials in Brazil.9

9. Keppel Offshore & Marine Ltd global resolution dated 22 December 2017.

20 South Korea Vietnam

Prosecutors continue to Court interpretation of anti- Changes to the Criminal Code Bribes include money, property and other investigate corruption at the corruption laws underlines how extend bribery offences to benefits worth more than VND 2m (approx US$90). Payments via intermediaries are highest levels of politics strict the anti-graft rules are individuals in private sector and also caught. South Korean prosecutors continue to probe The Anti-Corruption and Bribery introduce corporate criminal It has also now become an offence in the affairs of senior government officials, Prohibition Act is now in its second year, liability for related offences Vietnam for an individual to bribe a foreign including five former presidents, arising and we are starting to see cases coming On 1 January 2018, changes to Vietnam’s official (previously the law only dealt with from allegations of corruption and through the courts regarding its Criminal Code took effect that prohibit the bribery of domestic officials). influence-peddling that have implicated a interpretation. For example, it was held that individuals with ‘positions and/or powers’ number of large companies. In a related a gift of cookies – worth under KRW 50,000 in the private sector from offering or Commercial entities may also now investigation, the head of one of South (approx US$40) – violated the anti-bribery accepting bribes to induce a person to act face criminal liability for certain Korea’s most prominent global tech law as they were given in direct connection for the benefit of the offeror. The bribery of economic crimes that are often related companies was convicted of paying bribes with the public official’s official duties. public officials is also prohibited (as it had to bribery – such as tax evasion and worth nearly US$3m. The individual and the company were each been even prior to the new Criminal Code). money laundering. fined less than US$20 each. Another court held that provision of certain benefits in connection with a movie seminar was permissible because, among other reasons, the company had offered the benefits uniformly to all participants, which cut across a range of industries.

21 Europe

22 EUROPE

Austria Belgium

High-profile cases alleging Finally, following an eight-year Belgium still to Belgian former vice-president corruption in real estate investigation, several individuals, including implement various GRECO of senate indicted over senior ex-politicians, are now on trial in the sector continue recommendations allegations of bribery to high-profile ‘BUWOG’ case. The individuals In recent years, the Public Prosecutor’s are accused of embezzlement and making/ In April 2018, GRECO (the Council of expedite criminal proceedings Office against White Collar Crime and receiving improper commission payments Europe’s Group of States Against A former Belgian minister and vice- Corruption (WKStA) has commenced a in relation to the privatisation of a Corruption initiative) published an interim president of the senate has been indicted number of investigations into public state-owned real estate company. compliance report noting Belgium had not for influence peddling in a multinational officials for corruption. These include: satisfactorily implemented seven of the corruption probe concerning kickbacks 15 recommendations set out in GRECO’s allegedly paid in a trade deal between • investigations commenced in early 2017 2014 evaluation of Belgium. Most of France and Kazakhstan. The former senate against 32 employees of a public real the remaining recommendations have vice-president, who acted as a lawyer while estate company owned by the City of only been partly implemented. The in office, allegedly used his political Vienna. The WKStA alleges the recommendations related largely to influence to expedite a judicial settlement employees took bribes from multiple anti-corruption measures to ensure for his client, a Belgian-Uzbek businessman. construction companies. In turn, the transparency and integrity within While such settlement was enabled by, and construction companies are accused of parliament and the judiciary. one of the first following, an amendment to engaging in deceptive business practices the law, the indictment does not target by charging the public company fees for influence-peddling with respect to the works that were never carried out or legislative process surrounding the were overpriced; and introduction of that law. Rather, it is • investigations commenced in March 2018 restricted to alleged attempts by the senate against three officials of the Federal vice-president to influence, among others, Office for the Protection of the the minsters of justice and internal affairs Constitution and Counterterrorism to obtain and expedite a settlement for his (BVT), which represents the intelligence client. According to the investigators, agency of the Austrian police. They are resolving the pending criminal prosecution accused of misusing data and in Belgium was a Kazakh condition to the embezzlement. trade agreement with France, and the Belgian politician was paid a large sum to render a solution.

23 EUROPE

France

First DPA-style agreements concluded DPA-style agreements were introduced into French law in French anti-corruption agency provides indicate prosecutors’ approach to such December 2016 through what is commonly known as the guidance on Sapin II compliance Sapin II Law. The first French-style DPA was entered into resolutions between the French Financial Prosecution Department and a Following a public consultation, on 22 December 2017 the In February 2018, French prosecutors entered into the Swiss subsidiary of an international bank in November 2017. AFA released formal guidance on anti-corruption compliance first French-style deferred prosecution agreements (DPAs) The €300m agreement resolved charges of fraudulent direct programmes as required by Sapin II (‘Guidelines to help related to bribery. The agreements settled corruption selling of banking and financial products and aggravated private and public sector entities prevent and detect charges between the Public Prosecutor’s Office and two laundering of tax fraud proceeds. corruption, influence peddling, extortion by public officials, French companies.10 The agreements anticipate separate unlawful taking of interest, misappropriation of public enforcement actions against individuals – indicating First co-ordinated resolution between US and funds and favouritism’). French prosecutors’ willingness to pursue individuals as French authorities in a foreign bribery case These guidelines, although non-binding, are closely well as the companies involved. The agreements conclude monitored by the AFA and are inspired by international investigations dating back to 2011 relating to contracts In June 2018, a French global financial institution agreed standards – so much of the content will be familiar to those with a state-owned entity. to pay a combined total penalty of US$585m to settle charges used to dealing with similar guidance issued in relation to arising from corrupt payments made by an intermediary the FCPA or the UKBA. The companies agreed to pay a financial penalty made up to Libyan officials to secure investment business from the of a fine and disgorgement, as well as pay compensation Libyan state. Under its agreement with the financial Among other things, the guidelines set out the to the state-owned entity involved. institution, the US DOJ agreed to credit the US$292,776,444 AFA’s expectations of companies regarding third-party The level of the fines to be paid was adjusted based on that the financial institution will pay to the Parquet National due diligence, risk-mapping and codes of conduct. several factors. Aggravating factors included the duration Financier (PNF), which is equal to 50 per cent of the total Of particular note is the scope of the guidelines. of the bribery scheme, which ran for several years. criminal penalty otherwise payable to the US in relation Even though the duty of compliance set out in Sapin II Mitigating factors included the companies’ co-operation to the FCPA charges. This is the first co-ordinated resolution relates only to organisations that meet certain thresholds with the investigations, improvements to their compliance between French and US authorities in a foreign in terms of their size, the guidelines are aimed at a wide programmes and other remedial action, such as the firing bribery case.11 range of legal entities established in France – either public of certain managers. or private – including French subsidiaries of foreign groups. As part of the agreements, the French anti-corruption The guidelines also apply to all the aforementioned entities agency (Agence française anticorruption or AFA) will regardless of where they operate – including abroad – monitor the companies’ compliance programmes when they are not subject to more demanding (for 18 months/two years). anti-corruption provisions.

10. Agreements (Conventions Judiciaire d’Intérêt Public) entered into in February 2018 between the Public Prosecutor’s Office of Nanterre and Kaeffer Wanner and Set Environnement, respectively. 11. Société Générale SA global resolution dated 4 June 2018.

24 EUROPE

Germany Ireland

German enforcement German prosecutors said they found no Parliament passes new The breadth of the offences will also be authorities actively evidence Austrian officials were bribed, corruption law broadening expanded. For example, the definition of but they nonetheless alleged certain ‘corruptly’ will be expanded to include investigating bribery the definition of bribery payments breached internal controls acting with an improper purpose personally German prosecutors are investigating a and represented a negligent breach of and increasing potential for or by influencing another, whether by number of bribery and corruption matters. duty under Germany’s Criminal Code. corporate criminal liability (i) making a false or misleading statement; One long-standing investigation into the The company agreed to pay a penalty to The Criminal Justice (Corruption Offences) (ii) withholding information; or (iii) by sale of defence planes to Austria concluded resolve this matter without any admission Bill 2017 has been passed by both houses other means. in February 2018 with the company in of wrongdoing. of the Irish parliament. The law will introduce new offences such question agreeing to pay a €250,000 fine In another matter, a German technology as giving a gift or advantage that the giver and €81m disgorgement in Germany. Once in force, a company may be found company resolved an investigation in 2017 liable for bribery carried out by its officers, knows or ought to know will be used to into alleged bribes in Greece and Peru by employees, agents or subsidiaries – where facilitate bribery. Another new offence it agreeing to pay a €48m forfeiture order.12 such persons are acting to obtain or retain will introduce is corruptly creating or using business or a business advantage for the a false document – where someone knows company – unless the company took all or is reckless as to whether the document reasonable steps and all due diligence to contains a statement that is false or avoid the bribery. The new law will also misleading and is intended to induce a increase the risk that company management person to perform an act, in relation to his could face personal criminal liability for or her office, to his or her own prejudice bribery where the bribery is carried out or the prejudice of another. with the officer’s consent or connivance, or The new law will have broad extraterritorial was attributable to any wilful neglect on the reach, so that a person may be tried in part of the officer. Ireland for certain corruption offences committed abroad where those actions would constitute an offence if committed in Ireland.

12. Agreement between the Bremen Prosecutor’s Office and Thyssenkrupp’s Atlas Elektronik GmbH.

25 EUROPE

Italy The Netherlands

Major energy companies and Prior to 2011, the block had been the Dutch prosecutors continue Through this and other major cases, the individuals face trial in Italy for subject of various litigation and arbitration to work with their US OM has sought to send a clear message to cases. The defendant companies assert the business community: international alleged corruption in Nigeria counterparts resulting in that the onward payments were part of companies based in the Netherlands Two oil and gas majors (from Italy and the a separate agreement between the multimillion-dollar fines (including those based there for tax or Netherlands) are being prosecuted in Italy, government of Nigeria and the other parties Over the past five years, Dutch prosecutors financing reasons) must adhere to Dutch along with several individuals, on bribery (including a company associated with an have resolved several foreign bribery anti-bribery laws when trading abroad. charges. The case relates to the companies’ ex-minister for petroleum) to settle prior investigations with multimillion-dollar, It is clear the OM is not a light touch. 2011 purchase of a Nigerian offshore claims on the block. out-of-court settlements. Some, but not all, Changes to the Dutch Criminal Code in exploration and production block. have been co-ordinated with the US. The Italian courts may assert jurisdiction 2015 increased the maximum penalties Authorities allege that the money paid by over foreign bribery cases, including those In the most recent example, in 2017, a for corruption to 10 per cent of turnover the companies in 2011 was illegally paid on involving foreign companies, where some Swedish telecommunications provider and for legal persons guilty of foreign bribery to various individuals and companies part of the alleged unlawful conduct its Uzbek subsidiary agreed to pay US$965m or false accounting. associated with ex-government officials. occurred in Italy. in a co-ordinated resolution with the The defendants are contesting the charges. Public Prosecution Service of the Netherlands (Openbaar Ministerie, the ‘OM’), the US DOJ and the SEC to resolve foreign bribery charges related to business in Uzbekistan. Under the terms of its resolution with the SEC, the company agreed to pay US$457m in disgorgement of profits and prejudgment interest, and the SEC agreed to credit any disgorged profits the company paid to the Swedish Prosecution Authority or the OM.13

13. Telia Company AB global resolution dated 21 September 2017.

26 EUROPE

Russia

Proposed amendments to Code of Currently, an adequate compliance programme may be Criminal liability in the sphere of public Administrative Offences to encourage helpful in mitigating corporate liability for administrative procurement offences under the Code, but there is no mechanism to self-reporting and co-operation in self-report and co-operate with an investigation in return for In early May 2018, new provisions introducing criminal bribery cases leniency. These proposed amendments would open up that liability for misconduct in the sphere of public procurement The Russian parliament is considering amendments to the possibility, although it remains to be seen how, if passed, came into force. this would work in practice. Russian Code of Administrative Offences. Under the Code, Under the new provisions, the following may give rise to companies may be liable for domestic and foreign bribery Under the proposed amendments, companies under criminal liability: (i) deliberate violation of public (either public or private) carried out by those acting on the investigation could also see their assets frozen up to the procurement legislation by a person acting on behalf of a entity’s behalf. Under the proposed amendments, companies maximum amount of any potential fine. This would be a public customer to satisfy any material or other personal may be able to avoid liability for domestic bribery if they can significant risk for companies to consider when weighing up interests (provided that the inflicted damage exceeds the show they assisted in the investigation of the bribery the potential benefits of self-reporting. statutory threshold of RUB 2.25m (approx US$37,500)), (including making a report to the authorities) or if the bribe (ii) bribery of such persons; and (iii) inciting bribery of such We will continue to monitor these proposals. was extorted. persons. The range of sanctions includes criminal fines, This leniency would not be applicable to bribery of foreign imprisonment and prohibitions from exercising certain officials and officials of public international institutions activities and/or occupying certain positions. 14 connected with commercial transactions. In certain instances, a bribe-giver may avoid criminal liability for the bribery where such individual actively provides assistance in the investigation (including reporting to the authorities). The bribe-giver may also avoid liability if the bribe was extorted.

14. A foreign official is defined as an appointed or elected person who holds office in a legislative, executive or judicial body of a foreign state and any person exercising any public function for a foreign state, including for a public department or a public enterprise. An official of a public international organisation is defined as an international civil servant or any other person who is authorised by such international organisation to act on its behalf.

27 EUROPE

Spain Switzerland

Spain’s anti-corruption This follows a trend of low levels of Switzerland one of the most This is perhaps unsurprising given that enforcement continues to enforcement in Spain – at least in terms of active prosecutors in Europe some of the most high-profile international foreign bribery. It was not until 2017 that bribery cases of recent years have involved largely focus on domestic issues, in ongoing foreign bribery Spanish prosecutors secured their first allegations that the Swiss financial system despite last year’s first foreign convictions for bribery of a foreign official investigations has been used to transfer illicit money bribery convictions when two executives of a publishing According to TRACE International, related to the bribery in question. Spanish authorities are continuing to company pleaded guilty to bribing a Switzerland was the third-most active These include FIFA, Petrobras and 1MBD address allegations of domestic corruption, minister from Equatorial Guinea to secure enforcement agency in Europe in terms of matters, to name a few. In light of this, with little foreign bribery enforcement. contracts for their company with the ongoing foreign bribery investigations as Swiss prosecutors have been actively According to TRACE International’s Global country’s education ministry. The company at 31 December 2017. Only the UK and co-ordinating with counterparts in a Enforcement Report, Spanish authorities were itself was not part of the proceedings. Germany had more ongoing investigations number of jurisdictions, including the US. not carrying out any foreign bribery The conduct took place before corporate in Europe. investigations as at 31 December 2017. criminal liability was introduced into the Spanish Criminal Code in 2010.

28 EUROPE

United Kingdom

Following some debate, SFO future looks prosecution agreement on the basis that the company Adequate procedures finally tested at trial in secure but changes at the helm refused to provide external lawyers’ notes of initial a relatively small domestic bribery case interviews with then-current employees. are imminent The adequate procedures defence in section 7 of the UKBA The High Court ultimately dismissed the claim for judicial Debate about the future of the Serious Fraud Office (SFO) had – the corporate offence of failing to prevent bribery – has review since the claimant had not exhausted all available been rumbling on for some years – and the agency’s future finally been put to the test in a contested trial against a remedies before the Crown Court. However, in the 40-page was the subject of a formal government review in 2017. small UK office interiors company. The defendant company judgment, the court also made plain its view that the SFO However, the December 2017 National Anti-corruption had, at the time, 30 emplyees and operated out of an office had not complied with its duty, as a prosecuting authority, to Strategy made clear that the agency will remain in its that was no bigger than the courtroom take further steps to obtain the interview notes so that they current form, at least for the foreseeable future. may be disclosed in the criminal proceedings against the The company15 called evidence of its anti-bribery controls, With a new permanent director taking the helm in individual in accordance with the defendant’s Article 6 right including that it had a policy which required employees to September 2018, it remains to be seen if there will be any to a fair trial. act honestly and ethically, financial controls over invoice significant changes in the agency’s approach to bribery and payments, and anti-bribery clauses in contracts with third In response to this case, the SFO will likely take a more corruption enforcement. parties. It also produced evidence that the relevant robust position towards companies who claim privilege over individual understood bribery should not be used. The jury’s For now, the SFO is busy with a number of ongoing foreign first interview notes and is unlikely to agree to accommodate verdict signals they did not accept that those measures bribery investigations – about half of which are in the energy alternative arrangements, such as oral proffers. amounted to adequate procedures in this case. sector. That said, the SFO does not have a specific sector focus In the second case, a decision on which is still pending, a – recently concluded and ongoing bribery investigations have As a jury is not required to give reasons for its decision to US-based construction company (whose UK subsidiary is the cut across sectors (eg pharma, fast-moving consumer goods, convict, the precise rationale for this decision remains subject of an ongoing bribery investigation) challenged the banking, aerospace and shipping). unclear. However, the company’s reliance on a generic ethics SFO’s powers to compel an overseas entity to provide policy (rather than having in place specific anti-bribery overseas data to the SFO. SFO challenged on its approach to policies) and its reliance on an overall understanding that privilege and its power to compel Under section 2 of the Criminal Justice Act 1987, the SFO has people should not pay bribes (rather than evidence of specific the power to serve a notice on any person requiring them to training on this) could well have been factors that weighed production of overseas data produce documents relevant to the subject matter of an SFO against the company. The SFO has been the subject of two recent judicial review investigation, although the territorial scope of these powers This was an unusual case for the prosecution (which was the applications – both arising in the context of foreign bribery has been the subject of some debate. Crown Prosecution Service and not the SFO) to choose as a investigations and both likely to have an impact on the SFO’s With this latest judicial review of the SFO’s actions pending, ‘test’ case: the company had self-reported and, at the time of approach to such investigations. we may be about to get some welcome clarity on the trial, it was dormant and had no assets. Given the company In the first, an individual brought a claim for judicial review jurisdictional scope of these powers – at least as they relate was dormant and could not pay any financial penalty, the of a decision by the SFO not to pursue a company, XYZ Ltd, to overseas entities. only sentence available to the court was to impose an for breach of the duty of co-operation under a deferred absolute discharge.

29 15. Skansen Interiors Limited. Middle East and Africa

30 MIDDLE EAST AND AFRICA

Israel

Following first indictment of an Israeli Senior political figures at the centre company for foreign bribery, Israel opens of major domestic bribery allegations several new investigations The prime minister is at the centre of a major corruption After many years of failing to take any significant action investigation that has rocked Israel. The prime minister’s on foreign bribery, there has been a flurry of recent dealings are being scrutinised in at least three separate enforcement activity in Israel. In January 2018, an corruption probes, including one related to the telecoms Israeli pharma company agreed with Israeli authorities sector – with Israeli police pursuing charges of bribery to pay US$22m after admitting it paid bribes to officials in and related offences against him. Russia, Mexico and Ukraine. This followed a 2016 resolution with US authorities where the company and its Russia subsidiary agreed to pay US$520m to resolve charges it violated the FCPA.16 One of Israel’s largest construction companies is currently in the spotlight over allegations of bribery relating to infrastructure projects in Africa. Israeli police are investigating the allegations, and the company is the subject of a parallel audit by the Integrity Vice Presidency of the World Bank in relation to projects in Kenya.

16. Conditional Agreement between the Office of Israel’s Tax and Economic Prosecutor and Teva Pharmaceuticals Industries Ltd.

31 MIDDLE EAST AND AFRICA

South Africa

Several major multinationals in New law being considered to make Further, the Financial Intelligence Centre Act, 2001 creates the spotlight in ‘state capture scandal’ clear the facilitation of payments is an an important obligation on persons to report suspicious and unusual transactions and imposes extensive ‘know your offence and provide some comfort for A judicial commission has been established to investigate client’ requirements on ‘accountable institutions’ as defined allegations of corruption within multiple state-owned those reporting suspicions of corruption in the Act. entities and purported links between those entities and an The December 2017 draft Prevention and Combating The recently proposed amendments to PRECCA also provide Indian family, the Guptas, who are accused of using their of Corrupt Activities Amendment Bill is waiting to be a degree of comfort for individuals required to file reports close relationship with South Africa’s former president to introduced into parliament. This draft bill proposes to by seeking to provide that a person who bona fide files a secure lucrative public contracts. The issue has been amend the definition of gratification to expressly report as contemplated in the terms of subsection 34(1) may colloquially referred to as ‘state capture’. include ‘the facilitation of payments’ as an offence not be held liable to any civil, criminal or disciplinary in addition to giving and receiving gratifications Several multinational companies have also faced allegations proceedings in respect of the content of such report. of wrongdoing, as business partners of, or as service (although these payments are already illegal based on In the proposed amendments, bona fide ‘self-disclosure’ providers to, either the Guptas or the state-owned entities an interpretation of the Prevention and Combating of may result in no criminal or civil liability. alleged to have been ‘captured’ by the Guptas. Criminal Corrupt Activities Act (PRECCA) in any event). charges have been filed against the local units of Facilitation of payments includes any payment made to a international auditors, management consultants and public official, a foreign public official or any third party software companies. that acts as an incentive for the official to complete some Investigations are ongoing. action or process expeditiously, or to provide the party making the payment or another party an unfair or unlawful advantage.

32 Contacts For further information please contact one of the below or your local Freshfields contact.

Global contacts Knowledge contacts

Marius Berenbrok Michelle Bramley Global Investigations Co-head Global Head of Knowledge E [email protected] E [email protected]

Caroline Doherty de Novoa Geoff Nicholas Senior Knowledge Lawyer, Global Investigations Co-head Global Investigations E [email protected] E [email protected]

We would be happy to talk to you in more detail about recent developments and global trends in this area, or about any issues involving corporate criminal risk and investigations. Adam Siegel With thanks to Daniel Cendan, Counsel in the New York office, Emily Feirman, Global Investigations Co-head Knowledge Lawyer in the New York office, and the other various Freshfields E [email protected] lawyers who assisted in the preparation of this update

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